Private Label Products Are Eating into Brand Share as Consumers Ditch High-Priced Brands

National brands have enjoyed consumer loyalty and a dominant share of retail shelves for years. However, the tide is turning as private-label products increasingly capture market share — and in more significant numbers than ever. With inflation driving consumers to rethink spending, high-priced brands are losing to more affordable store-brand alternatives.

Private labels are no longer just the “cheaper option” — they’ve become formidable competitors in their own right. To maintain their edge, brands must prioritize value, innovation, and customer engagement to win back consumers who are increasingly willing to swap loyalty for savings.

In 2024, private label (store brand) products achieved record-breaking sales, reflecting a significant shift in consumer purchasing behavior. According to the Private Label Manufacturers Association (PLMA), store brand sales reached $271 billion, a 3.9% increase compared to 2023. This growth outpaced national brands, which saw a more modest 1% increase in dollar sales during the same period.

Over the past four years, annual store brand dollar sales have surged by over $51 billion, representing a 23.6% gain. Since 2021, private label products have experienced a 2.3% rise in unit sales, while national brands have declined by 6.8%.

All ten food and non-food departments tracked by Circana reported year-over-year growth in private-label dollar sales. Notable increases include:

• Refrigerated Products: Up 7.5%
• General Food Items: Up 4.3%
• Beverages: Up 4%

Why Are Consumers Shifting to Private Labels?

Several key factors are fueling this shift:

1. Price Sensitivity: Rising grocery bills have pushed consumers to seek cost-effective alternatives. Private-label products often deliver similar quality at a fraction of the price.
2. Improved Quality: Gone are the days when store brands were considered inferior. Many private labels now match or exceed national brand quality, particularly in categories like snacks, dairy, and household essentials.
3. Consumer Confidence: Shoppers have become more open to experimenting with alternatives. Positive experiences with private-label products during economic uncertainty have strengthened trust in these options.
4. Retailer Investment: Major retailers like Walmart, Target, and Kroger heavily invest in developing attractive, premium-quality private label lines. These are sometimes positioned as trendy, healthier, or eco-conscious alternatives to national brands.

Key Categories Seeing Private Label Growth

Specific product categories have been especially vulnerable to private label encroachment:

• Grocery Staples: Milk, eggs, and bread have seen notable shifts toward store-brand options.
• Household Essentials: Cleaning supplies, paper towels, and laundry detergents are winning over cost-conscious consumers.
• Health and Beauty: Products like vitamins, skincare, and over-the-counter medications are seeing substantial growth as shoppers recognize comparable efficacy in private-label alternatives.

What Should Big Brands Do?

National brands can’t afford to ignore this trend. To stay competitive, they should:

1. Reinforce Value: Highlight quality, performance, and unique benefits that justify their higher prices.
2. Innovate Strategically: Develop new product lines that align with emerging trends such as sustainability, wellness, or convenience.
3. Strengthen Loyalty Programs: Encourage repeat purchases by offering discounts, rewards, or exclusive experiences that private labels may struggle to replicate.
4. Optimize Pricing Strategies: While premium positioning has its place, aggressive promotions and flexible pricing can help retain budget-conscious shoppers.

In summary, private-label products are experiencing robust growth, outpacing national brands in sales and unit growth. This trend underscores a shift in consumer preferences toward more affordable and quality alternative retailers.